On 22 December 2014, CONSOB issued the Communication No. 0097996 (the "22 December Communication") for intermediaries active in the distribution of complex financial products to retail investors, with the aim to increase the level of protection in favour of the "least aware and therefore weakest and most vulnerable component of the market".

Through the 22 December Communication, CONSOB (i) recommends intermediaries not to offer to retail investors complex financial products that have been indicated in a specific list, including, but not limited to, securitizations, instruments convertible at the discretion of the issuer, structured and credit-linked instruments; (ii) reminds intermediaries that they must ascertain coherence between the products offered and the investors' profile; (iii) reminds intermediaries to prevent conflicts of interest which may occur in the distribution of complex financial products to retail investors and, for such purpose, recommends to remove incentives that can emphasize the sale of such products in a situation of a potential conflict of interest; and (iv) invites intermediaries to use the same assessment and simulation methods that are used for internal purposes to manage risks also in relation to the information to be provided to retail investors in the distribution stage.

In the event intermediaries decide to deviate from the abovementioned recommendations, such decision must be taken, on a justified basis, by the top management and the intermediary must inform the client of the fact that CONSOB considers such product "unsuitable" for retail investors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.